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Modern-Day Gladiators

The more government changes, the more it remains the
same. The Roman Empire built the Coliseum and entertained its
citizens with gladiators. Today cities entertain the masses by
building stadiums for baseball and football contests.

Washington, D.C., Mayor Anthony Williams wants to bring
professional baseball to the nation’s capital by contributing as
much as $200 million toward a new stadium. A group of northern
Virginia businessmen are working to saddle taxpayers with $100
million to $200 million in costs for a new baseball franchise. In
fact, more than 30 sports facilities have been built or planned
over the last decade. Last year, 15 baseball and football
franchises were asking for new stadiums.

Obviously, franchise owners prefer that someone else pay. Since
Milwaukee inaugurated the modern gladiatorial era in 1953 by
building a stadium to tempt the Braves to leave Boston, governments
have spent more than $20 billion, in current dollars, on sports
facilities. According to economist Alan Krueger, that’s 2 1/2 times
what the poor, impoverished sports moguls contributed.

Stadium supporters argue that such government “investments”
create jobs. Fred Baranowski, president of the Downtown San Diego
Partnership, even exults that the Padres ballpark project “has
stimulated property values and residential and commercial
development interest in a part of downtown that was dormant for
decades.”

It is all too good to be true. Public finance experts Roger Noll
and Andrew Zimbalist found that “no recent facility appears to have
earned anything approaching a reasonable return on investment and
no recent facility has been self-financing in terms of its impact
on net tax revenues.”

Baltimore’s Camden Yards may be one of the nation’s best, but
Johns Hopkins University economist Bruce W. Hamilton figures every
city resident contributes $12 a year toward the stadium’s upkeep.
And that doesn’t include the revenues that could have been
generated from investing people’s money elsewhere.

Many facilities are huge financial black holes. In San Diego,
the Padres convinced the city to build them a stadium - which has
been long held up in litigation - and then promptly dismantled the
team that went to the World Series. The team later reneged on its
promise to build new hotel and office space, which was supposed to
help generate tax revenue to pay off city bonds.

The Chargers came up with a $68 million renovation project for
Qualcomm stadium. Through revenue-guarantee, city taxpayers
effectively buy unsold seats, which has cost San Diego taxpayers
$25 million so far. The Chargers are now threatening to move to Los
Angeles - unless San Diego builds them a new stadium, thank you
very much. Obviously, stadiums generate economic activity. But
there’s no guarantee that they will even help their own
neighborhoods. For instance, Yankee Stadium has not revitalized the
Bronx. And even if they help some local property owners, there are
losers. San Diego’s project has boosted rents, driving out many
businesses.

Moreover, enriching a few lucky individuals or companies should
not be confused with benefiting the public. Making some people pay
so others can profit is a misuse of government. Especially when the
same argument could be made for subsidizing any business.

Why not build a new factory for General Motors? Or construct
buildings for new restaurants? Even if corporate subsidies were a
good thing in theory, there’s no reason to believe that a stadium
would be more productive than other public programs, let alone
private projects.

The real economic cost of stadium construction is the
“opportunity cost.” That is, any “investment” has to be measured
against the benefits that would accrue from spending the money
elsewhere, whether creating new schools or providing credit for new
entrepreneurs.

Almost every study proclaiming the economic benefits of sports
facilities ignores the impact of siphoning that money out of other
activities. As Hamilton puts it: “You produce jobs working at the
stadium, but you reduce jobs at bars or bowling alleys or clothing
stores or wherever else (fans) would spend their money.”

Economists Robert Baade and Allen Sanderson reviewed the
experience of 10 cities since 1958 and concluded that adding a
stadium had no impact on employment. Noll and Zimbalist found only
“an extremely small effect on overall economic activity and
employment.”

The best way for government to promote development is to improve
the overall investment and regulatory climate. True, politicians
quail before owners’ threats to move. Yet if the only way to
prevent a team from leaving is to shovel corporate welfare into a
billionaire’s hands, the proper response, especially from cities
and states in fiscal crisis, is to say no thanks. Public officials
need to remember what government is supposed to be about. The Roman
Empire provided bread, circuses and gladiators to anesthetize its
citizens. The American Republic can and should do better.